The Affordable Care Act (also known as Obamacare) was a hot topic on the Republican campaign trail and now, in the early days of the new administration. As certain GOP lawmakers push to “repeal and replace,” while others aim for minor adjustments only, you may wonder where everything stands.
What does an ACA overhaul mean for your clients in the long run – and how should they approach this year’s IRS reporting requirements in the short run?
Even though many employers would breathe a sigh of relief to see ACA reporting go away altogether, it may not be that simple – or even possible.
Current Status of an ACA Repeal
Although Trump made bold promises to repeal and replace the ACA as soon as he took office, he quickly recognized that such immediate and sweeping action wasn’t realistic. In an interview in January, he claimed a replacement law was “formulated down to the final strokes.”
But in another interview on Feb. 5, he stepped that back, admitting that the process is complicated and might take longer to play out. Now, more lawmakers are looking to “repair” the ACA, with the President and House Speaker both predicting a 2018 timeframe for making measurable changes.
With a full repeal of the ACA in question, and the timing uncertain, the biggest takeaway for employers is this: Information reporting remains mandatory this year … and possibly beyond.
Currently, ACA regulations require employers to report healthcare coverage information to employees using forms 1095-B and 1095-C and to the IRS using 1095-B/1094-B and 1095-C/1094-B.
Specifically, this affects employers with 50 or more full-time (or full-time equivalent) employees, all self-insured employers (regardless of size) and health insurance companies. This reporting requirement is in addition to reporting healthcare costs on W-2 forms.
As many businesses (and their accountants and tax professionals) learned from firsthand experience, tracking and reporting employee healthcare coverage is no easy task. The Employer Shared Responsibility Rule is a big burden – and getting even bigger this year.
The IRS accelerated the reporting deadlines for 2017, so you’re now looking at:
- March 2, 2017 – Provide required forms to employees (vs. March 31 last year)
- March 31, 2017 – Electronically file data with the IRS (vs. June 30 last year)
Ongoing reporting requirements and shorter deadlines mean employers need to be extra-diligent this tax season. Chances are good the IRS won’t be as lenient with incomplete or late filings, like last year. Neglecting to file and issue statements to covered individuals could amount to penalties of $250 a filing, up to $3 million.
Further still, the IRS will most likely expect employers to continue tracking the required data throughout 2017 so they’re prepared to report next tax season.
Stay the Course with the ACA Reporting Requirements
Looking forward, it’s important to keep in mind that even a full repeal of the ACA may not eliminate the IRS reporting requirements. A new plan still couldl carry a tax-related component, such as tax subsidies or tax breaks, that would involve some level of IRS reporting.
If anything, new health care legislation could increase the burden in the early days, especially if tracking and reporting requirements change significantly.
To make the process more manageable, many accountants and tax professionals are turning to online tax-filing services.
For example, eFile4Biz.com is an efficient, streamlined service for ACA reporting that includes printing and mailing the appropriate 1095 forms to employees and e-filing with the IRS. You simply upload or enter client data online (using apps you already use to run your business, such as QuickBooks Online Plus and Xero), and eFile4Biz.com handles the rest.
What’s more, you can maintain and file forms for multiple clients under one account, with payer and recipient records stored for easy and convenient access, year after year.
Rick Roddis is president of ComplyRight Distribution Services, a division of ComplyRight Inc., which provides cutting edge compliance products and programs for businesses. Rick began his career as an insurance underwriter, but quickly moved into sales, operations and management roles at different companies that partnered with Intuit, Staples, Office Depot, and others. In 2008, he became president of TFP Data Systems, the leading manufacturer of 1099, W-2 and ACA tax forms, envelopes and software. Over the past four years, he has been focused on transforming ComplyRight Distribution from a traditional 1099/W-2 forms manufacturer to a digital provider of Tax Solutions for businesses thru services like EFile4Biz and several other digital assets.